5 Charged With Insider Trading After Alcoholics Anonymous Confession

WASHINGTON (AP) — Federal regulators on Tuesday charged a Philadelphia investment broker and four others with illegally profiting on insider information that the broker learned from a friend he met at Alcoholics Anonymous.

The group allegedly made $1.8 million from the insider trading scheme, which stretched as far away as Hong Kong.

The Securities and Exchange Commission said Timothy J. McGee, a financial adviser at Ameriprise Financial Services, bought up shares of Philadelphia Consolidated Holding Corp. after learning the insurance company was about to be acquired. A Philadelphia Consolidated executive, whom McGee had known for a decade through AA, had confided that he was facing pressure at work related to the impending merger.

The SEC said the pair had grown close, trained for triathlons together, and McGee had assured the executive many times that he would keep any information they discussed confidential. The SEC said McGee instead bought up shares of the insurer and tipped off an Ameriprise colleague, Michael W. Zirinsky.

Zirinsky purchased shares worth hundreds of thousands of dollars through his own trading account, as well as those of his wife, sister, mother and grandmother, and his father also traded on the information, according to the SEC. Zirinsky then shared the tip with a Hong Kong-based friend, Paulo Lam, who passed it along to another friend. That man’s wife, Marianna sze wan Ho, then also purchased a large amount of Philadelphia Consolidated stock, regulators said.

The insurer’s shares surged 64 percent after Philadelphia Consolidated announced in July 2008 that it would be purchased by Japan’s Tokio Marine Holdings. The Zirinsky family made $562,673 selling their shares and McGee made $292,128, while Lam netted $837,975 and Ho’s take amounted to $110,580, the SEC said.

The civil complaint filed in the U.S. District Court for the Eastern District of Pennsylvania charges McGee, Michael Zirinsky, Robert Zirinsky, Lam and Ho with insider trading. The SEC is asking that they be ordered to relinquish the profits from their stock sales and pay penalties.

“McGee stole information shared with him in the utmost confidence, and as securities industry professionals he and Zirinsky clearly knew better,” said Elaine C. Greenberg, Associate Director of the SEC’s Philadelphia Regional Office. “As this case demonstrates, we will follow each link in a tipping chain all the way to Hong Kong if necessary.”

Lam and Ho have agreed to settle, with Lam paying the SEC $1.2 million and Ho paying $140,000. The SEC said neither Lam nor Ho admitted or denied the allegations as part of the deal.

The Financial Industry Regulatory Authority, a private group, aided in the case.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

  • mb3542

    I don’t see the big deal. Congress gets to insider trade with absolutely no consequences.

    • beazr

      it’s illegal look it up. What they reported in the news was a lie.

      • last chance gas

        Excuse me [I don’t mean it] but I was under da impression it was 432 (excluding Hons. Ron Paul, Justin Amish and Walter Johnson) and 99 (Rand Paul).
        We have to purge the entire government before Communism is completely installed. This started with George (the B@st@rd) Bush Sr.

      • ExposingTheLies

        Especially if it’s linked to from the Drudge Report and featured on cbslocal. Much of the news is made up after the coup and cover up. Unelected officials took over Washington and the media. They think you can’t handle the truth. Fact of the matter is we have no democracy, president, and freedom of press is an illusion.

        Our next election is shaping up to be as big of a sham as the last. Do you know why Sarah Palin’s bus tour was really canceled? Do you know why she stayed 30 miles away from the second debate and chose the death of Steve Jobs to announce that she’s not running? Know what leaked out? Sarah Palin and Cain aren’t in the race for the same reason, the truth leaked out. Search PalinsDirtyLittleSecret for the biggest cover up in history

    • inventory3

      Where did it say in a meeting ? The article stated in a relationship…

  • Michael Oberndorf

    Moral: Don’t whine at AA meetings.

    • Jeff Rosenbury

      So millions of alcoholics suffer just to catch three white collar criminals? There is a reason ministerial and doctor confession exemptions exist.

      We don’t need the police infiltrating group therapy sessions looking for an easy bust.

      • Jeff DeWitt

        It sounds like the insurance company exec (not named) shared something that was bothering him with McGee, and McGee had repeatedly assured him he would keep the information quite.

        So far that is right and proper, nothing wrong.

        But then McGee broke the trust.

        It doesn’t sound like the police did anything wrong, nor did the insurance exec.

  • jane

    to bad they arent congress, this would be ok then.

  • Dan

    an immoral alcoholic? Who wouldda thought?

    • Kathy

      Alcoholism is a disease. You should be blessed and grateful you don’t have it.

      • SG

        How does one contract alcoholism?

      • Keith in Seattle

        Coming from an ex-alcoholic, no, it’s NOT a disease. It’s a choice you make every day to either drink or not to drink. Yes, it’s that easy. I found three common denominators in NA, CA, and AA. Weak minded people.

      • sam

        is nicotinism a disease? Heroinism?

        I have Psoriasis, that is a disease. Cancer is a disease. addiction to alcohol is not a disease, it is a mental obsession and there is a difference. Otherwise any form of addiction can be considered a disease.

      • Billy Burrstone

        Acoholism and addiction are caused by pathways in the brain that are out of balance – brought on by excess dopamine receptors developed in the brain. This imbalance can develop in infancy, for various reasons. Or it can be brought on through substance abuse during adolescence. The resulting imbalance becomes manifest in adults who are subsequently “powerless” after their first drink. Alcoholism is not “caused” by a lack of character or willpower.

      • mjazz

        Actually Sammie Jo, you can die from alcohol withdrawal, and people do need medication to quit.

      • StevensonNY

        @ Sammy Jo – Your ignorance is staggering, or maybe you are just misinformed. Why don’t you go go ask a physician what their opinion is on whether or not it is a disease or a choice. Alcoholism is widely accepted as a disease and physical addiction by the majority of the medical community.

      • Steven

        Sammie Jo : The medication is meetings. Just like the medication for a diabetic is insulin.

      • Sammie Jo

        It’s not a disease it’s a CHOICE!
        If it was a disease it would require medication to get over, but it only requires saying no to the bottle.

      • ella funt

        So, by having this DISEASE, you get fined, lose your driver’s license and possibly go to jail because you drive.

      • Daisy

        “Alcoholism is a disease. You should be blessed and grateful you don’t have it.”

        Amen. Although alcoholics in recovery are overwhelmingly grateful for having a disease that brings them such deep spiritual recovery that they don’t need to hurl accusations of immorality at others or profess superior knowledge “How does one contract alcoholism?” regarding a subject about which they’re clearly ignorant. To answer SG: How does one contract cancer? Or a neurological illness?

      • Get_Real

        I love the victim mentality of America.

        Actually I don’t, it’s pathetic.

      • makemyday

        Well said – some people are complete morons!!!

    • Peter O

      Dan – stupid sarcastic remark. Idiot!

    • Peter O


  • Perry

    Moral to the story.

    Don’t trust Alcoholics with any information outside of your alcoholism. Why did these guys even mention the insider trading at an AA meeting?

    • james pog

      Moral to the story

      People should actually read the story, before commenting on the story.

    • kingfish

      Read the story first. Insider trading was not mentioned. Insider trading took place after information was learned.

  • August

    How come the 12-Step religious cult’s “Higher Power” didn’t stop this; it is a REAL “Higher Power” isn’t it?

    • J.D.

      You may want to do some research to understand what they call a higher power, it’s not necessarily a traditional God-like figure.

    • Zelsdorf Ragshaft III

      August, you demonstrate what you know about 12 step programs with your ignorance. There is more good done at a 12 step meeting than you have done in your intire miserable life. We can only hope you do not suffer from your ignorance in all areas of your life.

      • mimsy

        well for most of my INtire….or Entire life I sat in those cult-like meetings and saw alot of people die…..AA damn near killed me…..


    • makemyday

      It’s as **HIGH** as YOU want it to be!!!

  • joe camel

    see what happens when you stop drinking and join a cult?

  • guido

    the difference between a alcoholic and a drunk……A drunk doesn’t have to go to meetings…….

    • Vicky Bevis

      I can tell you’ve sat in a few meetings, guido. As the wife of a recovered alky for 29 yrs., the 4th. of this month, I can tell ALL on here that alcoholism is cunning, baffling & powerful, just for openers. I see so many on here who have little to no knowledge about the “disease” of alcoholism. And yes, it IS a disease. (Master’s Degree Nurse) They have isolated a gene; what turns it on IS alcohol. I was just discussing this with my GYN. earlier this wk. as her parents were both alkys.

      If drinking alone caued alcoholism, then why am I not one? I used to drink alongside my husband as we were living the “good” life that he worked so hard to have . ( Work-a-holics are frequently alkys.) He drank too much for too long, much like the history of alcoholism in his family. There’s no history of it in mine, so I’m not affected by alcohol like he is; in fact, I still drink when we go out to dinner & have for the last 29 yrs. A drink or 2 is all I have. If one is a TRUE alcoholic, 1 drink is too many & 1,000 is not enogh

      I’m genuinely surprised at how little knowledge about alcoholism gleened in the last quarter of a century is STILL not public/common knowledge. Alkys, like the rest of us, come in different packages. There is no “one size fits all” as far as getting “Clean & Sober.” Most take several tries to get sober for good & the few who do, are as grateful for sobriety as anything I’ve ever seen. Personally, I credit “Alanon” for keeping my sanity, avoiding a nervous breakdown & giving me a different way to live with or without people who are alkys. “Alateen” also did wonders, esp. for my oldest. He’s STILL in touch with a friend he met there. so many yrs. ago & went to visit her last summer.

      Investigate AA for what it offers-sobriety. It’s a “God helps those who help themselves” Kind of program & in the end, the alky MUST “get sick & tired of being sick & tired.” If not, then he hasn’t had enough to drink, which is why these Judges who “assign” DUIs to AA Meeting are so egregious. To put a person in a confidential group who doesn’t want to be there, is like playng with matcvhes.

      The AA “Big Book” is available in any library. Read it & LEARN.

      Wife of a grateful alky.

    • ella funt

      An alcoholic HAS to drink.
      A drunk LOVES to drink.

      • Sammie Jo

        Nobody HAS to drink, they drink because they want to.
        I had an alcoholic mother in law, father in law and ex husband, they wanted to drink.

  • CleanFun

    So much for the Anonymous part.

    • makemyday

      @CleanFun – It is *Anonymous*…. But these “fools” didn’t follow the program!!

      @Sammie Jo – do your research BEFORE you write nonsense – as alcoholism is a recognized disease by the AMA!!!

      @guido – NOT a very smart comment…. Do YOU have a problem with alcohol??

  • bobby

    Never………..and I mean never, STOP DRINKING!

    • makemyday

      @Bobby…. Stupid comment from an obviously “stupid” person!!!

      • w. nelson

        Well, I gotta get drunk

        And I sure do regret it

        But it’s just something I gotta do!

  • Tshep

    Now go apply these same rules to all the corrupt politicians hanging out in congress…all 535 of them need to go NOW!

  • George Johnson

    Congress can do this. The explicitly made the rules so THEY can do this. Why not these guys?

    • The Bruce

      Because some animals are more equal than others.

  • Pete

    Moral of the story = don’t trade based on inside info. It’s illegal!

  • Chippy55

    I don’t see how it is considered insider trading as the stock could have gone down after he purchased it. And, if it went down would this still be considered insider trading?

    • a racic

      well said!!

  • Anonymous

    After 24 years of attending AA meetings, I can assure you that these men did not sit in a meeting and discuss insider tradiing. They are probably referring to a conversation among AA members that took place outside of the meeting proper – either before or after the meeting. AA meetings revolve around the topic of alcoholism and recovery and AA has no opinion on outside issues, including politics, business and the stock market.

    • hoppedup

      Not necessarily true. People admit all sorts of things at 12 step meetings.
      Did you not hear about the guy who admitted he set his house on fire and killed his kids on purpose because he was going through a divorce with their mother? A persona at the meeting (an online AA meeting) ratted him out.

      • Anonymous

        There actually is no such thing as an “online AA meeting.” There are written disclaimers in AA discussion rooms saying that these are not real AA meetings. The format of these online meetings preclude members from sharing as they normally would in a meeting. Also, people don’t sit in the middle of an AA meeting and make confessions – they meet one on one with other members of the program to discuss personal issues outside of the actual meeting. People come in and are very sick and most people don’t recover. Only about 6% are still sober 10 years later, so the rooms of AA are filled with any number of messed up people, however there are those of us who do quite well. The people who stick around and work the program do beautifully..

      • hoppedup

        oops… meant ‘person’ not ‘persona’.

  • Big John

    It doesn’t sound like a 9th step confession. It sounds like a couple of guys at an AA meeting were just “talkin’ money talk”. And somebody made a move on it. This could’ve happened anywhere.

    • Some people need AA

      Confessions are actually the 5th step… 9th is making amends for those wrongdoings… If you’re gonna talk about something you don’t know about, then google could make you sound less ignorant. Other than that, you’re probably right about the money talk.

  • JD

    Beware of info you share with a “Sponser” in A.A. as well. There is NO confidentiality within A.A. like a doctor or attorney / client etc.

    • Xenophanes

      Excellent point.

  • Paul in FL

    If you have a drinking problem and can’t quit drinking by the age of 35 or 40 you shouldn’t – people who go cold turkey in middle age make a mess out of it.

    • Vicky Bevis

      Not true. I know people who drank socially for years ( usually a small amount to be social) But when they retired, it became uncontrollable. That’s why it’s cunning, bafflingly & powerful

      My husband got “Clean & Sober” at age 39 ( almost 40 ) pushing middle age.He has not had a slip, fortunately. He also did not have a rehab. visit. Everyone is different.

    • mjazz

      Beats drinking yourself to death

  • mike

    There’s plenty of law enforcement to investigate AA meetings and bust fake NFL merchandise website, but not enough to deport illegal immigrants. Sad. We’ve had two awful presidents in a row now. I hope the next one gets America and the constitution. Job #1 is to protect the borders.

    • makemyday

      Well…. If we ALL get behind Romney in November – then we can make that happen!! This “buffoon” Odummer has to go – before he does anymore damage to OUR country!!

  • Michael Gene

    For politicians job 1 is staying in power no matter what.
    Insider trading should be seen for what it is rigging the game so the gambler always loses, we call it theft in Las Vegas. I also do believe the thieves in Washington should be prosecuted for investing in stocks after deciding to shower the company with our tax money or shorting the stock after deciding to hurt the company.

  • The Bruce

    The nerve of these insider traders. Who do they think they are — members of Congress?

  • JV

    Insider trading is like COUNTING CARDS. How could ANYONE in their right mind NOT do it? I mean you might as well say “OK you can buy and trade stocks OR even play cards but only blindfolded and wearing ear plugs! You just have to LIE GOOD I guess! So DAMN stupid! Hey shoot me, I remember the darn cards that were played. I’m so damn sorry sir.

  • Mike

    “McGee obtained the information after an executive at the Philadelphia insurer, with whom he had a relationship with through Alcoholics Anonymous, complained about pressure he was facing due to the impending acquisition.”

    Kinda unclear as to where the comment as made. I had a comment I made in an AA meeting get back to a family member and cause all kinds of consternation. I never went back. Have maintained a rewarding sobriety, along with my atheism. Hint: well-glued folks don’t go to AA. Be careful.

    • Vicky Bevis

      “Hint: well-glued folks don’t go to AA. Be careful.”

      Generally people in the thros of addiction aren’t too well-glued to begin with. But many use AA for recovery, for however long it takes them to feel normal being sober, & then they usually move on into life as a sober alky. I know one right now, sober 17 yrs., who goes to a meeting every day; he’s just substituting AA for his addiction. His private life shows he hasn’t gotten the “program.”

  • RCK

    Apparently some of you need somebody to look down on. The addicted are good targets as are the mentaly ill. Makes you look good, because you sure need something to make you feel good.

  • dj

    this has very little to do with AA, they could have been in a Starbucks. Just to guys, acquaintences talking. The businessman should have known to keep quiet, and McGee & Zirinsky NEW they were using insider information. Both are CROOKS. And as the comments about the US Congress, those brilliant members of Congress have exempted themselves from the SEC laws.That is how they got so rich during their terms in office.

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